I’ve been a journalist for more than 20 years writing about business one way or another. Everything I‘ve learned in all this time can be boiled down to one truth: finance, transportation, marketing, supply chain - no matter what the original subject is all roads lead back to sales.

Taxes, Apple's Profits and Why It Will Never Manufacture in the U.S.

In a previous life I used to write about tax issues and how tricky even sophisticated multinationals found it to navigate this area. To the uninitiated I say, be afraid, be very afraid. One of the advantages of a freelance life is that I can pick and choose what to write about, more or less. Not having to write about transfer pricing and multinational tax strategies, almost, not quite, but almost makes up for the miserly health insurance for individuals that is the lot of most freelancers.

So it is with great reluctance I introduce the subject of global tax strategies in regards to Apple, mainly because – spoiler alert – it sheds just a little bit of light on a seemingly unrelated question that drives U.S. politicians nuts and Apple denizens into a frenzy: why can’t Apple manufacture in the U.S.?

The New York Times covered Apple’s complex tax practices in this article, de rigueur reporting during tax season in which companies such as Intel, General Electric and so on are put under the microscope to find out how the heck is it that they are able to pay so little, comparatively speaking, in taxes.

$2.4 Billion Saved

This weekend it was Apple’s turn and the Times’ reporting was thorough.

Apple—and no one should be surprised by this given its creativity in product design and retail—has been a trailblazer in creating cross-border tax strategies that are so novel and innovative that they are being copied by other multinationals. (Lucky for them a law was passed last year prohibiting the granting of patents on tax strategies, but I digress).

These tactics saved Apple—and its shareholders– $2.4 billion last year, the Times said, citing a recent study by a former Treasury Department economist, Martin A. Sullivan.

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I agree with most of what you said except the part about companies and their relationship to labor. At least public companies. By law their first responsibility is to their shareholders. It doesn’t always work out this way in practice — it has been interesting to see, for instance, shareholders push back lately against CEO pay packages. Also, some of the best benefits in this country come from the largest companies including some very forward looking ones, like health insurance for same sex partners. Those are provided for the reasons you say–for the company’s sake they have to retain top talent. The whole point of capitalism, though, is to reward shareholders–not employees or customers or the government.

huh? well what you miss is the employees are capitalists. Also you don’t keep customers unless you meet their requirements. They can go to someone else. You don’t sound like a person who ever worked in a company that has competition? It is fierce in technology as an example. Very few companies own a market and even Apple gained what they have in their come back from 1997 on by being uncompromising in their quality and user experience. The whole point of capitalism and free markets is the free exchange of goods and services for mutual benefit…..voluntarily. The trash heap of businesses is full of small and large companies that did not satisfy their customers with what they had to offer….both private and public companies litter the trash heap.

You act as if employees have no choice? Yes they limit their choices when they don’t get educated or trained or they are part of unions that don’t allow change. Structural unemployment has occurred in this country and will again if we continue on this path. As well, regulations should be attacked. The tax system and the regulations suck an estimated $2T out of our economy for no productivity …for no good.

I wonder which regulations should be “attacked”? Apparently there are mysterious regulations that are hampering the chances our great and noble corporations’ ability to compete in this tough world. But nobody can seem to name them.

So explain to me exactly how regulations saying you cannot dump toxic waste in river is bad? Or that you cannot leave animal waste in meat is bad? Or how is it bad that you can’t have a 5 year old working heavy factory machinery? Or are you trying to say that because a regulation protects consumers from the actions of business that regulations are bad and should all be gotten rid of?

yea go Natasha! You too jc2002. I have zero problem with a company trying to minimize its tax bill–legally–but every problem with companies that try to undermine workers comp and protection, environmental laws, food safety and consumer protection by spotlighting the one ridiculous reg out there that businesses (yes they are out there) as an argument to weaken necessary protections.

Let’s be honest. The real reason “Job Creators” like Apple won’t produce their product in the US is because the Chinese worker will work 11 hours a day 6 days a week for $250 a month. They live in labor camps where they can be made to wake up at any hour of the day to man the labor lines. Until the recent expose on Foxconn these workers weren’t getting overtime and were working 7 days a week.

That’s right. the American worker will never be able to compete with “slave labor” nor should it.

If companies like Apple and their shareholders are going to enrich themselves by enslaving desperate workers who will work just so they can put food in their mouths…maybe it’s time they start paying their fair share of taxes.

I’m getting tired of the drumbeats to lower corporate taxes. If Apple is any indication they are paying 9% taxes and creating jobs IN CHINA

I have one iphone and was going to get a second one for my wife. Now maybe I will look into a company with more social and moral responsibility

So that is what is great about capitalism — and social media too for that matter. More than ever companies fear the social media fueled voice of consumers and activists, enough so that they will change policies and practices if they think it will hurt the company.